Freddie Mac announced the average rate for a 30-year conventional loan fell to 3.73% this week. The average rate fell from last week’s number of 3.87% and from 3.89% in later December, thanks to another strong week for the domestic economy, especially in comparison to continued financial struggles in Europe and Asia.
The average rate for a 15 year fixed loan also fell this week to 3.05 percent--down from 3.15 percent. 15 year mortgages are most popular with those looking to refinance and the low rates should be noted by anyone paying a 30 year fixed rate mortgage. Many homeowners have a great opportunity to save on their mortgage.
Both mortgage rates fell due to a strong outlook on the domestic economy. Unemployment benefit requests declined this week and wages continue to see improvement. As the Holidays seemed to prove, consumer confidence has also greatly increased in the US.
As investment in Europe and Asia has struggled, many investors are turning towards purchasing government bonds and securities. Yields on securities issued by Freddie Mac and Fannie Mae have fallen recently, perhaps due to their current demand. These securities encompass around 60% of all US mortgages. Bond investors have accepted lower yields on these securities, allowing mortgage bankers to charge lower interest rates to their customers.
Banks have also been trying to attract milennial first time home buyers to the market, who, as of yet, have not been buying up homes like previous generations.
Again, great news for home buyers, home owners and refinancers. Interest rates really add up over the life of a loan, so this kind of adjustment can really benefit buyers years down the line. Coupled with lower mortgage insurance rates, many home buyers who were not eligible even a month ago, may now be approved for a loan.